Beware The Death Cross On S&P 500 Can Have The Reverse Effect

Analysts have spotted the Death Cross on S&P 500 index. A Death Cross forms when the long term 200 SMA crosses above the short term 50 SMA. When this happens, it mostly means the start of a long term downtrend. “Death cross” patterns continue to spread through the stock market like an epidemic, even infecting market segments believed to be more insulated from overseas turmoil. In the month of August analysts spotted a Death Cross on Apple AAPL charts. Death crosses are being spotted everywhere now. China stock market rout has made everyone jittery. Analysts are bearish right now. So what to do now?

When a death cross forms, traders should be bearish. But not everytime. The dreaded “death cross” in the Standard & Poor’s 500 Index may well herald better days if history is any guide, Bloomberg strategist Sejul Gokal writes. So everytime a death cross was spotted on S&P 500 didn’t mean a downward spiral. Rather the index rallied a number of times in the recent examples.

This CNBC article explains how you are going to trade the S&P 500 Death Cross Formation.